January 22, 2010
Pay You Back With Interest
A Subcommittee of the Virginia State Bar Disciplinary Board has imposed a public reprimand with terms in connection with an attorney's fee practices in a divorcematter. The attorney was paid $5,000 and had "estimated" that the work could be completed for that amount. It was not. The attorney thereafter advised the client that she would be responsible for fees and costs if her bill for legal services was sent to collection. The client also was advised that interest on the unpaid fee balance would accrue at a rate of 18% per annum.
The divorce was obtained and the client owed over $18,800. The lawyer sought and received from the client an irrevocable assignment of proceeds from the sale of the marital residence. The attorney continued to send the client statements of amounts due, which with the interest charges eventually exceeded $60,000. The client obtained new counsel who tried without success to negotiate with the attorney, which led to a bar investigation.
The subcommittee found that the attorney had violated the prohibited transactions rule in several respects. The attorney must withdraw the claim on the marital residence and desist from using the interest rate in receiving irrevocable assigned interests or in client billing arrangements. (Mike Frisch)
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